 So welcome to Second full day of Mises University 2015, you know Dr. Salerno mentioned the multigenerational aspect of Mises you and I can certainly speak to that also I attended my first Mises University in 1988 Back before a lot of you were born. I'm guessing I know the judge made a joke last night. Oh 2000 you guys weren't born then y'all chuckled but but most of you really weren't born in 1988. Were you? Okay, a few of you were Yeah, I was only five I was a child prodigy But you know Back in that day, I was like you guys right? I mean I was young and super enthusiastic And I would attend the lectures and discussions all day and then stay up late into the night Talking to the other students about what we had heard and you know arguing Arcane points of Austrian and libertarian theory, of course you can do all that on the internet now Which we couldn't do back in the day, but you know now look at me now now. I've got gray hair and a little bit of a bigger belly and You know when the four o'clock in the afternoon lecture slot comes around I'm thinking Time to hit the sack now But back in that day it wasn't called Mises University But and it was smaller than we have now and when I attended my first one The lecturers were Murray Rothbard, of course as the principal speaker, but also David Gordon Roger Garrison and Hans-Hermann Hoppe and then with the next couple of years we added Joe Salerno and Walter Block and Jeff Herbner Bob Higgs and many others You know who are still here today now, of course there these guys are here this week kind of you know doddering around Mostly lucid at least you know part of the time So some of you you know 20 25 years in the future it may be the ones up here giving the lectures and You know, I'll be the one out there in my little little electric chair thingy, you know like like you like at Walmart So some of my own PhD students are now doing research and teaching in Austrian economics And I'm sure we'll soon be teaching at Mises you in coming years already writing for Mises.org and so on So it really is great to see the Austrian movement as a sort of self-perpetuating one and We're so excited to be here this week with all of you guys And to watch you in the coming years to see what you decide to do and you know, this is sort of my inspirational you know call To you to you know pursue excellence and to take what you've learned and think about it and reflect on it Add to it challenge it build upon it Whatever you decide to do whatever career path you undertake. I know that you're sort of standing on the shoulders of giants Just as all of us who are doing this today have stood on the shoulders of those who came came before us now If you decide to become a professor or a writer or a journalist or for that matter a musician or a business person or An artist or an engineer, whatever you will be making in an important sense an entrepreneurial decision Right because you will be pursuing specific objectives but When you employ the means to achieve those ends in the future when you employ the means today to achieve those ends in the future You won't know with precision. You won't know exactly. You won't know with certainty whether your ends will be achieved Right so you're exercising some sense of cognitive judgment about what the future may bring and The extent to which things that you do now can help to bring about that uncertain future That's the essence of entrepreneurial decision-making as we'll see in just a moment now It's a it's a pleasure for me to speak to you about entrepreneurship Because it's an extremely important topic not only within the Austrian tradition, but within The wider world the academic world the policy world the business world You know, there's lots and lots of discussion about entrepreneurs about Entrepreneurship the role that entrepreneurship plays in society The functions of the entrepreneur, etc in the popular media in mainstream economics in all kinds of All kinds of aspects. I mean, there are a lot of you know famous Entrepreneurs who are well known their activities are you know closely tracked They're reported in in the newspaper, you know, not not just an entrepreneur magazine Which has a very explicit interest in people like mr. Branson that you know in the New York Times and wherever You know some well-known entrepreneurs are not only you know widely respected but almost revered Of course, there are other entrepreneurs who are not quite so revered but You know the problem that mainstream economists have faced Is trying to reconcile the increasing interest in entrepreneurs and entrepreneurship within society at large With the lack of an explicit treatment of the entrepreneur in their theories Right so in mainstream economics neoclassical economic theory in the standard textbooks both Beginning intermediate and advanced in the academic journals and so on there's kind of an awkwardness With regard to entrepreneurship so mainstream economists recognize that the entrepreneur is an important actor in society like these people and others But these economists don't quite know how to incorporate the entrepreneur into their theories theories that are based on Describing equilibrium conditions, you know with mathematical precision and so forth It's not obvious where to include the entrepreneur In mainstream micro and macroeconomic theories. In fact, I mean, I even did some empirical research myself I looked in some textbooks that I had Within easy reach it wasn't a big research project. I just reached up to my bookshelf and looked in the indexes Of some of the leading textbooks and this is I think this is variance intermediate micro text You notice that the word entrepreneur does not even appear in the index Right. So not only Are we lacking a detailed analysis of the role of the entrepreneur In microeconomics the textbook writers don't even mention the word They don't mention the word even a single time. Okay, so somebody who is looking out at the real world and and you know Trying to figure out what is what are people like Branson and jobs etc. What are they doing? How do they influence the market and so forth will find no help whatsoever In contemporary economics textbooks aside from those written by you know members of the austrian school Of course, it's very different within the austrian tradition Tom De Lorenzo in his opening talk Uh He quoted mesas a reference that mesas made to the relationship between the entrepreneurs And the consumers and note that tom in his lecture did not even You know think it necessary to elaborate. I know why is mesas mentioning the entrepreneur here? It just you know It just sort of rolls off the tongue Because within the mesasian system the entrepreneur is as mesas himself put it the driving force of the market mesas once Wrote you know it is impossible to eliminate the entrepreneur From the picture of a market economy Did you did you catch that? I mean it is impossible to eliminate the entrepreneur From the picture of a market economy So the idea of doing an entire treatise On economic theory without mentioning the word entrepreneur would have seemed very bizarre to mesas He continues The various complementary factors of production cannot come together spontaneously They need to be combined by by the purpose of efforts of men aiming at certain ends And motivated by the urge to improve their state of satisfaction In eliminating the entrepreneur one eliminates the driving force of the whole market system So those of you who have read mesas Those of you who have studied economics Austrian economics recognize this notion In the in the middle of the quotation of you know human actors striving to improve their state of satisfaction In mesasian terms to remove uneasiness By employing certain means to achieve ends Right mesas describes that as the function of the entrepreneur In a market system and he points out that You know if we did not completely understand the entrepreneur If we did not adequately conceptualize the entrepreneur We would not be able to explain the market system itself So let's unpack this idea a little bit with reference to things that we learned yesterday and things that most of you probably knew before you came Entrepreneurship really fits in with the Austrian theory of production The Austrian notion of production Right so production theory starts with the idea of inputs and outputs or more generally means and ends Right human action involves employing Means to achieve desired ends or in the language of production theory Combining and recombining scarce inputs In an attempt to produce particular kinds of outputs Right so we know that economic goods can be distinguished as carl menger distinguished them between so-called original factors of production land and labor intermediate goods Goods that are produced by human actors But are not Themselves the final end of the production process but are used to produce yet other goods and services Until we reach the final goods that are consumed directly and of course in a world of complex factors of production In a world with a variety of different kinds of original factors labor in particular We produce a large number of intermediate goods which can be combined into yet a larger number of final goods So, you know how to produce a particular set of final goods in the most efficient way is not at all obvious It may be obvious to robinson cruzo On his desert island. It may not be Even cruzo may just may realize there are many ways to make a fishing pole Different kinds of wood Make it longer or shorter. It can be tipped with you know a rock or it can be tipped with a piece of metal or whatever He can You know try to produce a lot of them at the same time He can go slowly and only produce one sort of more handcrafted production Even cruzo Typically faces a variety of different production methods and must choose among them is trying to choose the most efficient one Production of course takes place through time Right, this is a you know stylized version of the hayekian triangle and I know this This simple graphic does not quite meet the the roger garrison standard for graphical sophistication Although I will say in my defense as I was putting this lecture together I you know just did a google image search for hayekian triangle and picked the first thing that came up and then I noticed The url was www.auburn.edu slash garrison something so Production takes time Right, so when at the moment when we first employ means to achieve our ends Right, we don't get the ends instantaneously and there is some uncertainty About whether the precise ends to which we aim at which we aim will actually be realized Most of you are already familiar with The so-called theory of imputation Which is one of the great achievements of the austrian school in the 19th early 20th century and widely recognized By all economists as being a distinct austrian contribution Right the idea that the value of the means of production is imputed from the value of the ends That are achieved by production, right so You know champagne isn't expensive because The the land that is used to grow the grapes to produce champagne in that particular region of France is very expensive land Right rather the causation runs the other way around Right land in the champagne growing regions of France is very expensive Because consumers place a high valuation on a glass of real champagne And the value of the drink is imputed backwards To the value of the land Rather than sort of the marxist hue, right or the labor theory of value to which even adam smith fell victim Which asserts that the value of consumer goods and the prices of consumer goods Are determined by the values and prices of the factors used to produce them that's got it exactly backwards, right? and We'll talk in just a moment a little bit more detail about the no-sense of marginal product and marginal revenue product Right the marginal product of a factor Is the contribution to production Of an additional unit of that factor or service The marginal revenue product is a way of expressing the marginal product in monetary terms Right, so if one more parcel of land Can produce, you know 100 000 dollars worth of champagne Then the value of that marginal parcel of land is can be no greater than 100 000 dollars Would also presumably be discounted Depending on the amount of time it takes to go from land to drink. Okay Most of you have studied This notion of production if not in austrian texts even in your mainstream economics courses You've heard a version of production theory that is not entirely different from this But one thing that is typically left out of mainstream production theory Is who is actually doing all this? Who is organizing production? Who is making the decisions to combine this parcel of land With these seeds and this fertilizer and this kind of labor and these machines and so forth To produce eventually over many stages a nice refreshing bubbly drink that we can hold in our hand You know, we're going to have a champagne party at the end of Mises you you know that right? That's sort of our end of end of the week celebration, although maybe it's maybe it's bud wiser. I can't remember Um Who is organizing production and where do profits come from? Right if all production is organized perfectly Right such that Factors of production are priced according to their marginal revenue products Uh, then all of the value of production is imputed back to the factors. There's nothing left over for profits Or losses, but we know that in the real world firms do earn profits and other firms earn losses I mean, how can this be? How can we explain this? Remember profit for austrian economists Right is a function that only exists in a state of disequilibrium Profits only exist in disequilibrium Likewise for losses Right in a notion of I mean Mises and Rothbard use this construct of the evenly rotating economy or But you can just think of that as a sort of long run equilibrium state um In this long run equilibrium state hypothetical state Each factor of production earns exactly its marginal revenue product discounted According to time preference depending on the length of time between when that factor is paid And when the final goods and services are sold to the consumers Right, so that piece of land that contributes exactly $100,000 to the To the owner's amount of champagne to the champagne revenues from the champagne producer We'll we'll trade for exactly a hundred thousand dollars on the land market Okay, workers will be paid a wage that is exactly equal to the discounted Value of their marginal contribution to production Those who own and manage firms will also get some kind of a financial return Right because they're managing the firm is a is kind of like a labor service Right, so owner managers will get to keep a little bit of the firm's revenues Determined by sort of the value of what they could earn in the market if they chose to become laborers Rather than and work for someone else rather than manage their own firm You can think of that as an opportunity wage or Rothbard uses the term implicit wage Capitalists those who lend money to producers in advance of production Are paid their principal plus interest Right, so in this long-run equilibrium state workers will earn wages Landowners will be paid a land rent all of those things determined by discounted marginal revenue product Owner managers will earn an implicit rate wage Capitalists will earn interest And that's it Right, there's nothing left all of the receipts from production will be distributed among those factors those inputs according to these these particular relationships Of course outside the evenly rotating economy In the real world the day-to-day world of disequilibrium We find that sometimes Workers earn a wage that is higher or lower than their eventual Realized marginal revenue product suitably discounted Some capitalists will be paid more or less than what they could have earned If they had employed their capital in an alternative use why because people make mistakes When the champagne producer goes out into the labor market and offers wages to champagne workers That that He or she doesn't know exactly how much revenues will be realized a year later in the sale of champagne Right, there's an estimate of what the champagne will sell for in the market From that I estimate what I think your marginal revenue product will be and I offer you a wage Associated with your discounted marginal revenue product, but I might be wrong. I mean maybe by the time the champagne Becomes available in stores consumers will have changed their preferences Towards, uh, you know non-alcoholic drinks or different kinds of alcoholic drinks or maybe the economy will be in recession People will have less disposable income to spend on champagne or maybe more Right, I could get it wrong So no one knows ex ante exactly what the realized marginal revenue products will be exposed It's it's an estimate but those estimates can be right or wrong And of course if I as the person coordinating this process If i'm able to purchase factors of production at prices that will be below The marginal revenue they ultimately generate then I have some extra money left over Right, so it may be the case that once I go to sell my product I've already paid all my factors of production. I've accounted for my implicit wage I've paid any interest payments that are due to capitalist. I may still have some money left over in my pocket That of course is what we call profit. That's entrepreneurial profit Um, and the converse may be true also I may have made it may turn out that I've overpaid for my factors of production I end up with less revenues than I anticipated and I have an economic loss and you know, it doesn't take much thinking about Business to realize that firms earn losses all the time Um, and we typically don't think about those or we quickly forget because you know failed products sort of wash away from our memories And we we tend to remember the successful products and services because we're using them and we're dealing with them all the time And we often forget the unsuccessful ones You know, we talk about apple and the ipad of the iphone iPod you know being sort of phenomenal success because I just look around the room and you know, there's 50 Ios devices or more probably in the room right now Or you know air jordans or something like that Nike has had a lot of very successful campaigns to market particular kinds of You know athletic footwear, but you know, we also should keep in mind the numerous failures That have been just as significant in business history as these successes Some of you old timers will remember the edsel I mean david gordon was one of the first to buy an edsel when it came off the assembly line in 1952 he probably still has it. You know, this is uh almost, you know the death of the ford motor company back in the 1950s Anybody remember the new coke? Back in the 1980s think about 1985 a coca-cola thought it would be a good idea To change the formula for coca-cola. This is not a diet drink or a you know energy drink This is just plain old coke, but they changed the formula and they called it new coke It was a huge expensive advertising campaign. There's a total flop Consumers hated it. So they brought back the old coke as what they called coca-cola classic And then eventually they phased out new coke and coca-cola classic just became coke Everybody remembers the uh, you know The ipod the iphone the ipad but not many people remember the newton So the newton was steve jobs first attempt in the Mid-1990s to produce a handheld computing device Of course had it was pretty primitive compared to the devices that we have today and a little stylus Of course, it wasn't networked to anything. There's no internet But you could keep your contacts on it and you could make appointments and so forth. It was a complete disaster complete flop um, so you know the idea of You know people like steve jobs you're having this sort of um You know almost magical ability To foresee the future and to produce those goods and services that consumers will love or in the famous oft-quoted line of steve jobs, you know jobs once said, uh You know consumers don't know what they want until I tell them Okay, this notion that he could sort of create consumer demand Through advertising and clever marketing and so forth. I mean apple really is a brilliant marketing company Probably more so than a technology company Uh, but you know, you might think oh that sounds like it goes against the quote that De Lorenzo used on opening night about the consumers being you know captain of the ship but of course We're we're at the case that steve jobs could create demand through his own persona and so forth Then we wouldn't have the newton or the next computer Which is another one of steve jobs great failures in the 1980s So, you know, they're my point is they're just as many failures as successes Maybe the new terminator moved me terminator genesis, which cost, you know $300 million to make and was a total flop at the box office a couple weeks ago would be another good example Right, so we can't only think about profits We must also think about losses So anytime you hear your professor or your friend Talk about capitalism as a profit system Be sure and correct them Politely of course right not obnoxiously and say, ah, it's better described as a profit and loss system You know the reason why that is important is not just you know To be a you know terminology nazi or whatever, but uh because this notion Oh, we have a profit system misleads people into thinking that profits are easy to obtain All you got to do is set up shop And the profits will just come rolling in Okay, if we get people into the mindset of thinking about a profit and loss system they will realize Oh I'm not quite sure I want to try that Okay, or boy, you know for every, you know wealthy Successful entrepreneur that I envy and want to you know tax and regulate and so forth You know, they're just as many or more unsuccessful ones, you know, whom I should pity And and subsidize. No, no, we don't subsidize them either So let me just Take a brief detour to talk about uncertainty and to distinguish uncertainty from risk Because I've mentioned the uncertainty that is inherent in In our actions already The american economist frank knight who was no friend of the austrian school But whose work I think is very useful to us in understanding entrepreneurship famously distinguished between risk and uncertainty and knight used Knight defined risk as you know situations in which we don't know exactly what will happen in the future But but but we have a you know Pretty good understanding of the problem We understand the processes by which various outcomes are produced and we can write down a you know probability distribution function Over the space of possible outcomes, you know, for example casino gambling right when I throw the dice When I throw a die, I don't know exactly what number will come up But if it's a normal die, I know that there are six possible numbers And the probability of any one number coming up is one sixth And you know, I can sort of estimate how much I want to bet or whether I want to Do a certain thing based on an outcome of the role of the dice By sort of doing a mathematical computation right I can calculate the expected return of doing this The expected value of doing that if the probabilities are known and objective However, according to knight there are other situations In which we don't know what's going to happen tomorrow And we cannot really articulate the problem in terms of uh You know probability theory Right, so I you know, I don't know the probabilities of any particular outcomes occurring And it may be the case that I can't even articulate the set of possible outcomes Right, so these are situations like you know, uh You know tomorrow will I meet the person of my dreams and fall hopelessly in love I mean, you know, you can't go to the back of your stat textbook and look up the distribution function And estimate. Oh, yes. Okay. It's just gonna happen with probability point Six therefore I should get a haircut today, right? I mean, it's not it's not that kind of decision Likewise for steve jobs You know, if I introduce a handheld electronic computing device will I become a bazillionaire? Or will it flop? I mean, there's no You know table of probability distributions that steve jobs can consult To know whether or not he should take the plunge And actually go into production and design and and produce and try to sell these things or not Lidwig von Mises had a younger brother named Richard von Mises Who was a famous mathematician and probability theorist who taught at harvard in the 1930s Richard von Mises used a slightly different kind of terminology That is also adopted by Lidwig von Mises in human action So if you read human action carefully, you'll notice Mises the the older Mises distinguishing between What he called class probability and case probability And he gets this terminology from his younger brother though. Interestingly, he doesn't cite the younger brother's work because Apparently they did not get along. There was some there were some family issues there Um So what uh The younger Mises Richard von Mises called class probability refers to a situation where a particular event Can be described as part of a class of similar and repeatable events In other words, you know my throw of a die right now at this moment You know, I mean in some sense, that's a unique event, right? I mean, it's There's only one of me and this moment in time cannot be repeated And there's particular, you know atmospheric pressure and the direction of the wind and the temperature in the room And the composition of the die and other materials that make this in some sense kind of a unique event But for all practical purposes those peculiarities don't matter Right and from the point of view of thinking about casino gambling It's useful to conceive of each throw of the die being simply one member of a set That includes all throwing of a normal unweighted, you know die Right so according to Richard von Mises the reason we know That the likelihood that a three will come up is one sixth is because we could in principle You know throw a die a million times Or a billion times we could just perform the experiment And right now and what numbers come up each time and if we do this experiment long enough We'll find that a three comes up one sixth of the time and a five comes up one sixth of the time and so on And so in the limit if you think about this mathematically, right in the limit the likelihood of any particular number coming up as one sixth Okay Insurance works largely according to these same lines Right. I mean every every house is unique in some sense But from the point of view of the insurance company You know houses can be bundled into groups of houses that are in a similar town That are built of similar materials that have a similar kind of electrical system That have a sprinkler or don't have a sprinkler system and so forth. So, you know the I have my homeowner's insurance through state farm and I do talk to jake in the in the night, but Um State farm doesn't know The exact likelihood that my house will catch on fire tonight Right, but it knows from you know collecting data over long periods of time of houses in this town that are built out of these Materials and are about this age and so forth, you know about how many of them catch fire On a given night They have you know many many years of actuarial data On house fires from that they estimate what is the likelihood that my My house in particular will catch on fire because they consider my house catching on fire to be a member of the set Of houses with similar characteristics catching on fire And so they will offer me an insurance policy Right where I can such that I can pool my risk with the owners of similar houses And we all put in a little bit of money each month And the insurance company pays out to those of us whose houses do actually catch on fire Okay There are other situations In which each event is so unique That it cannot meaningfully Be considered part of a larger class Right, so while you know starting a starting a company Me starting a company is you know In one sense it's part of the class of people starting companies But each company is so unique the circumstances are so idiosyncratic That we can't pool all of those into one set and say oh, well, you know In the us, you know 40 of all new businesses failed in the first six months. Therefore p equals 0.4 For you. I mean each case is so different That we cannot meaningfully speak of a homogeneous class of events Business profit loss you're falling in love Creating a great work of art whatever these are unique events That cannot be thought of as members of a homogeneous class so you can't buy insurance On you know the likelihood that you'll fall in love no one no one will sell you a policy That will pay off if you don't fall in love There's no actuarial data that would support You know this kind of treatment of uncertainty So My point is what frank knight calls risk The mesas brothers call class probability What frank knight calls uncertainty? The mesas brothers call case probability And so you will encounter the terms class probability and case probability in your reading of mesas And other austrian economists But the more common terminology what is more or less the same thing is knight's notion of risk and uncertainty What why am I spending time on this? Well, something that you should know But also understanding the difference between risk and uncertainty is critical to our understanding of entrepreneurial profit and loss Okay, so entrepreneurship in the broad sense In the most general sense refers to human action under uncertainty The bearing of uncertainty that is involved anytime each of us engages in action According to mesas the term entrepreneur as used by economic theory means Acting man exclusively seen from the aspect of the uncertainty inherent in every action So you could say in mesasian terminology That your decision to come to the lecture this morning was an entrepreneurial decision Because you have to employ scarce means your time most obviously Maybe it cost you something to get here and gas money or you had to walk and expend some energy or whatever But again, as I say the opportunity cost of your time is certainly important You know, my hope is that at the end of the lecture You will say Wow That was the best entrepreneurship lecture i've ever heard Probably some of you have never heard one before so you will say that You know, this this is so much more valuable than anything I could have been doing with my hour like sleeping or whatever You know, so in a sense you earned a profit Right, I mean it's it's a mental profit a psychic profit But if you if you value the ends that you achieved by spending your time here in this lecture Greater than the opportunity cost of the means, you know, you got more than what you paid You earned a profit in this general sense. I mean it's possible Extremely unlikely of course, but possible that some of you may say, you know, that was terrible That was the worst thing I ever heard I would have been much better off sleeping or You know watching tv or whatever watching Netflix back in the dorm And you would you know, maybe you would say you earned a loss Yeah, again, it's it's kind of a psychological thing. It's not a material manifest thing But we can apply the concept of profit and loss to our everyday action Of course most of the time in economics and in history We're not really interested in that kind of entrepreneurship Right. We're interested in commercial entrepreneurship Right. We're interested in those human actors who specialize In purchasing productive resources combining them in particular ways To achieve goods and services to produce goods and services that they will then offer To consumers for sale Trying to earn monetary profit and trying to avoid monetary loss So I call this, you know, entrepreneurship in the narrow sense or the commercial sense Right. The Austrian economist Ludwig Lachman Described it as follows. We are living in a world of unexpected change i.e 90 and uncertainty Or messesian case probability Hence capital combinations resource combinations will be ever changing will be dissolved and reformed in this activity We find the real function of the entrepreneur So the real function of the entrepreneur in a market economy Is this constant combination Dissolution and recombination of productive resources In an attempt to achieve monetary profit And to avoid monetary loss This is what Mises meant in the quote that I showed you before In describing the entrepreneur as the driving force of a market economy Now In doing so the entrepreneur employs the specific tool of economic calculation Or monetary calculation and I believe the lecture immediately following this one will be Joseph Salerno's lecture On economic calculation and one of the things I want you to listen for I don't know how much he'll emphasize this Is the idea is the extent to which you know Mises Theory of economic calculation calculation though expressed by Mises in the context of socialism And socialism versus capitalism is not essentially you know a theory about socialism It's a theory about how entrepreneurs Try to combine and recombine resources in a world of uncertainty It happens to be a particularly Important problem in the context of socialism because under socialism you don't have capital markets You don't have factor markets. You don't have prices for labor and land and capital goods And so there's no way for the entrepreneur to make these decisions about how to allocate resources efficiently Okay I also want you to keep in mind as I've emphasized already That the act of engaging in entrepreneurship Is not the same thing as Describing particular entrepreneurs as successful or not In other words entrepreneurship is the act of bearing uncertainty The act of resource combination under uncertainty whether it is successful or not This is particularly important In thinking of thinking of profit and loss, right? So one can engage in entrepreneurship One can be an entrepreneur without making money You might be unsuccessful at being a narrow commercial entrepreneur Now you can't probably go on doing that forever because eventually you'll run out of resources You'll run out of capital. You'll spend all your accumulated capital. You can't be an entrepreneur anymore So it can't sort of go on indefinitely But even the entrepreneur who consistently makes losses over some period of time is still an entrepreneur Is still engaged in entrepreneurship. Of course, there's a sort of a Darwinian selection process in the market right that rewards those who are successful at entrepreneurship While disciplining those who are unsuccessful I'm going to skip a couple of points because we're about out of time, but just sort of summarize with this you know What are some things that some ways that entrepreneurship is often described in the literature That I think are confusing or misleading Right, so I want to emphasize that entrepreneurship in the mesessian sense in the austrian sense Is not limited to things like small business management and startups If you read entrepreneur magazine Or you take an entrepreneurship course at a mainstream university in a business school They will probably say well the domain of entrepreneurship is small business management and startups So for austrian economists, right running a small business or starting a new business those certainly are entrepreneurial acts But but they're not exclusively they're not the only entrepreneurial acts, right? Owning and and organizing and coordinating a large business an existing business is also an entrepreneurial act Running an ongoing enterprise as well as a new enterprise is entrepreneurial Notice there's nothing in the definitions on the from the previous slide that refers specifically to the size of the company or the age of the company um Nor is entrepreneurship limited nor is the domain of entrepreneurship limited to novelty innovation As in joseph schumpeter's notion of entrepreneurship entrepreneurs may Be charismatic. They may extra exhibit creativity and leadership skills, but not necessarily so that's not required as part of being an entrepreneur Nor is it useful in my view to think of entrepreneurship as the discovery of pre existing profit opportunities This is a kind of an interpretation really a misinterpretation. I think of what the well known modern austrian economist israel kurzner As in mind with his account of entrepreneurial discovery Um, nor do I think entrepreneurship is something you can learn in school I mean you can learn about entrepreneurship in school. That's what we're doing now Uh, you can read a book on entrepreneurship theory. I in particular recommend this one Uh, but there's some other good ones too. Uh, you can study the great entrepreneurs of the past You could theorize about entrepreneurship and so forth But reading books and taking courses is not a substitute for exercising entrepreneurial judgment Right for analyzing the future for forming estimates of what the results of your action will be What mesas and night called judgment? Others have called intuition or gut gut feeling gut instinct or for stay in to use the german term Right, that is not something that you can learn from reading a book Or that you can learn from taking a course and uh, something that we can discuss later on the week Nor do I think entrepreneurship in the mesasian sense is something that the government can create or encourage or stimulate or steer through particular kinds of tax and regulatory policies or By directly, you know, subsidizing small companies or electric green companies or whatever I mean poor nicolai tesla not nicolai tesla, but ilan musk You know is in one sense a great entrepreneur But it's also sort of a welfare bum In that his his entrepreneurial efforts have been critically dependent on government subsidy So you'll be hearing more about entrepreneurship and other context in your courses during the week But I hope this will give you some foundation for different ways to think about entrepreneurship In particularly in particular of the way that we find in mesas and the other austrians. Thanks